You Should be Thankful a Domain Name is Undeveloped

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I love waking up to the peaceful sound of ocean waves breaking on the beach while the sun streams in through the sheer curtain panels covering the windows. At some point down the road, we will probably buy a beach house in Nantucket. When that time comes, I will almost certainly have to work with a real estate agent to find the perfect house or piece of land that fits our needs and budget.

It would be so much easier if we could just visit town hall, select an undeveloped oceanfront lot, fill out a bit of paperwork, cut a very small check to cover the registration fee, and register our property with the recorder of deeds. This is obviously not possible because pretty much every piece of oceanfront real estate is owned by someone or not available for sale. If someone wants desirable real estate to build a home or business, they will need to need to buy it from the owner and pay whatever the market rate is. This is the case whether the piece of real estate has a structure on it or is totally undeveloped.

When it comes to domain names, the same thing holds true. Just about every desirable domain name is owned by an individual or entity. Some domain names have businesses operating on them, some are used for personal websites, and others are not developed (or underdeveloped). If a person wants to buy this valuable domain name, they need to work with the owner to come up with a fair sale price based on the market value. For example, the market has established that 3 letter .com domain names are worth at least 5 figures, often 6 figures, and perhaps 7 figures. A domain name is not worth less than the market value just because it doesn’t have a full business operating on it.

I canโ€™t tell you how many people make ridiculously low offers using the logic that my domain name is not being used or is underutilized so it is not worth much. They seem to think that because I have not developed Hoy.com (means “today” in Spanish) that I am going to sell it for a fraction of its market value. No, that is not going to happen.

People seeking to buy a great .com domain name should be happy it is owned by a domain investor or someone else who is willing to sell it. I have come across and/or tried to buy thousands of great domain names that are simply not for sale. I would encourage them to try to buy a domain name from Oracle or Salesforce.com to see what it is really like to try to buy something that is not for sale regardless of the offer. Buyers should be thankful the domain name they want for a business or project is not yet developed into a major brand or owned by a huge company rather than get upset that it is owned by a domain investor.

20 COMMENTS

  1. Elliot,

    This is my favorite post of 2018! Awesome job explaining the similarities between real estate and domains.

    You’re spot on man.

    Luc

    • I usually find comps (name, price, date, venue) from NameBio.com that show the value of similar domain name sales and email them those. It’s quick and easy to do. It’s very hard for buyers to argue against comps, just like it is for buyers of residential property. If they do argue, they are overly emotional or irrational buyers who are not worth investing more time talking to. Only if their perception of the value of the domain name changes and they come back with a comp-driven offer do I ever re-engage with them. I’ve got better things to do with my time than try to convince irrational buyers of the value of a domain name.

  2. Great post! I routinely receive low ball offers on my domains. Buyers actually believe they have some RIGHT to my domain. Their snarky and rude comments only polarize the negotiations and increase the asking price.

    If I really wanted to buy something that ONLY ONE PERSON owned, I would be sure to be polite and professional. As domain investors, we are not selling Honda Civics where thousands are available and buyers can shop dealerships or private sellers to find their best price.

    The beach front property analogy is one that I use myself to explain the value/price of a domain. It blows my mind the way buyers react. Here are a few of my favorites:

    “You only paid $10 for it!”
    “Why do you own my name!?”
    “How did you get MY name??”

  3. This was a really inspired post, which according to Merriam-Webster means “outstanding or brilliant in a way or to a degree suggestive of divine inspiration.” (Proverbs 16:9)

  4. Right on Elliot. This comes down to a lack of understanding.

    Domain names are very similar to physical real estate. There are many variables that translate to value.

    For example, the domain extension is like the neighborhood, and the keyword is like the property itself.

  5. I met one of Jeff Bezos’s real estate agents (he probably has dozens) at a party and I asked her if she could check with her client Bezos to see if he’d be willing sell the undeveloped domain awake.com and if so, how much?

    She let me know her client is “not interested” in selling any of his domains.

    I also should mention I recently sold my home in the Grove in Florida — a home we renovated and put a lot of love in — money, time, resources.

    The real estate agent informed me the property would be MORE valuable without a home on the lot (it was built in the 1950s).

    But, yes, I get inquiries about domains every week — and people make lower than market offers because the domain is “not in use” or “not even developed”. I’ve even had a few characters ask me to donate 5 figure domains to them so they “could put the URL to good use”.

    I never take these “offers” personally — if I’m in a really great mood, I’ll even respond and thank them for their “generous” offer, “however I must decline”.

    No doubt many people visiting this blog have similar stories – per “offers” for undeveloped domains.

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